American Opportunity Tax Credit
The American Opportunity Tax Credit (AOTC) was designed to improve the other tax benefits that were in place. The whole goal was to help students and their families with the rising costs of tuition and to provide a larger tax credit.
Families with college tuition expenses can claim a tax credit of up to $2,500 each year for up to four years per student through the AOTC tax credit. More good news about the AOTC is up to $1,000 of the annual credit amount is refundable.
American Recovery and Reinvestment Act
The American Opportunity Tax Credit is part of the American Recovery and Reinvestment Act which was created by the President. The AOTC may be permanent, but time will tell. It’s possible for a student to receive a credit up to $10,000 over the four years of higher education.
One of the good things about the American Opportunity Tax Credit is the fact that it is available for four years of college compared to the Hope Tax Credit which is only available for two years of college.
Under the Hope credit the maximum credit a student could have received was only $1,800 per year. After the two years of taking the Hope credit students were eligible to take the Lifetime Learning Tax Credit worth up to $800 for the third and fourth year of college. So you can see how much better the American Opportunity Tax Credit really is for students and their families.
The American Opportunity Credit also can be used for textbooks and course materials which the Hope credit and the Lifetime Learning Credit did not allow. So all of these savings add up to help the students make college a little more affordable which is the goal. If you’re in design classes and you really need that laptop, then it can be claimed as an expense if you absolutely need one!
Who Does the American Opportunity Credit Apply to?
The AOTC does not apply to all college students. People must qualify by income levels and student status to receive the college credit. Students must be undergraduates and in their first four years of college to be eligible. If you’re reinventing yourself and going back for that second bachelor’s degree, sorry you don’t qualify for the credit.
Income for married filing jointly cannot be more than $160,000 to qualify for the American Opportunity Tax Credit. If you’re filing as single or head of household your income cannot exceed $80,000 to qualify for the credit.
American Opportunity Tax Credit Information
If you are looking for more information about the American Opportunity Tax Credit you can search through TurboTax Online. If you click on the support tab and enter your topic you will have tons of information straight from tax experts.
Here’s a good idea too, you can estimate your tax return and see how the software prompts you to take credits and deductions you qualify for. You do not pay unless you file or print your tax return, so you can try for free. With TurboTax Online you are guaranteed the biggest refund possible or least tax owed. You will not miss out on any tax credits you are qualified to claim. Take it for a spin and find out if you qualify for the American Opportunity Tax Credit!
So fun article is! I know more from it.
Posted by: supra for kids | October 23, 2011 at 03:53 AM
we had home damage this summer from a twister are they any tax breaks 4 us or our child in college?
Posted by: n | January 17, 2012 at 10:32 AM